Value
9.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.7 |
| P/S | 10.0 |
| EV/EBITDA | 7.9 |
| Fwd P/E | 9.8 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 6.2x
- ▸PEG: 0.48
- ▸Attractively valued
MLCO · Why this verdict
Why Melco Resorts & Entertainment L (MLCO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Melco Resorts is a deeply discounted casino operator (forward P/E 6.2x, 62% drawdown) that has beaten earnings estimates in three of the last four quarters, but revenue is declining 6%, quality is borderline and the price is in a confirmed downtrend. The analyst target implies 47.7% upside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is declining 6% and there is no competitive moat, putting overall quality at 4.0 out of 10, at the minimum threshold. Growth breakdown | Revenue should stabilize and return to growth for quality to improve. | →Stable |
| CounterEarnings growth scores 9.1 despite falling revenue, suggesting cost control is offsetting weaker sales. | ||
Valuation is very cheap: the forward P/E is 6.2x and the PEG ratio is 0.34, with the price 47.7% below the $5.51 analyst target. Valuation breakdown | The stock should close part of the gap to the analyst target if earnings hold up over the next 12 months. | →Stable |
| CounterCheap multiples on cyclical casino earnings can reflect expected declines, and the 62% drawdown shows the market has lost confidence. | ||
Earnings have mostly exceeded estimates: 3 beats and 1 miss in the last four quarters, with an average surprise of about 84.5%, though the latest EPS of 0.06 missed the 0.08 estimate. Earnings | EPS should meet or beat estimates at the November 5 report. | ↓Deteriorating |
| CounterThe most recent quarter was a miss and EPS has declined from 0.21 in the prior two reports, so momentum in earnings is fading. | ||
The price is in a confirmed downtrend, below a 200-day average sloping down 9.6% over 30 days, with falling on-balance volume and an oversold RSI of 23. Momentum breakdown | The price must stop making lower lows and reclaim its 200-day average for the downtrend to end. | ↓Deteriorating |
| CounterAn RSI of 23 with a volume surge is a classic capitulation pattern and often precedes a rebound. | ||
The stock carries high volatility risk, with implied volatility of 86% and a beta score of 10 out of 10, so price swings are likely around earnings in 12 days. Risk breakdown | Implied volatility should stay elevated through the November 5 earnings report. | ↑Improving |
| CounterHigh implied volatility also means options are expensive, and big moves can work upward as well as downward. | ||
Revenue is declining 6% and there is no competitive moat, putting overall quality at 4.0 out of 10, at the minimum threshold.
→StableGrowth breakdown
- Expectation
- Revenue should stabilize and return to growth for quality to improve.
CounterEarnings growth scores 9.1 despite falling revenue, suggesting cost control is offsetting weaker sales.
Valuation is very cheap: the forward P/E is 6.2x and the PEG ratio is 0.34, with the price 47.7% below the $5.51 analyst target.
→StableValuation breakdown
- Expectation
- The stock should close part of the gap to the analyst target if earnings hold up over the next 12 months.
CounterCheap multiples on cyclical casino earnings can reflect expected declines, and the 62% drawdown shows the market has lost confidence.
Earnings have mostly exceeded estimates: 3 beats and 1 miss in the last four quarters, with an average surprise of about 84.5%, though the latest EPS of 0.06 missed the 0.08 estimate.
↓DeterioratingEarnings
- Expectation
- EPS should meet or beat estimates at the November 5 report.
CounterThe most recent quarter was a miss and EPS has declined from 0.21 in the prior two reports, so momentum in earnings is fading.
The price is in a confirmed downtrend, below a 200-day average sloping down 9.6% over 30 days, with falling on-balance volume and an oversold RSI of 23.
↓DeterioratingMomentum breakdown
- Expectation
- The price must stop making lower lows and reclaim its 200-day average for the downtrend to end.
CounterAn RSI of 23 with a volume surge is a classic capitulation pattern and often precedes a rebound.
The stock carries high volatility risk, with implied volatility of 86% and a beta score of 10 out of 10, so price swings are likely around earnings in 12 days.
↑ImprovingRisk breakdown
- Expectation
- Implied volatility should stay elevated through the November 5 earnings report.
CounterHigh implied volatility also means options are expensive, and big moves can work upward as well as downward.
Per-dimension breakdown
Quality
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 3.8 |
| Gross margin | 3.6 |
| Op margin | 4.1 |
| Net margin | 2.2 |
| Current ratio | 4.0 |
| Moat | 4.5 |
| Piotroski F | 5.6 |
- ▸No competitive moat
Growth
5.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.1 |
| EPS growth | 9.1 |
- ▸Declining revenue: -6%
Momentum
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 3.7 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 3.9 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -9.4%/30d — confirmed downtrend
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.2 |
| Price target | 9.8 |
| erm sentiment | 5.6 |
- ▸Analyst upside: 70%
Insider
4.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
| notable moves | 3.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.7 |
| quality rank | 4.6 |
| growth rank | 0.0 |
- ▸Attractive P/E vs peers
Technical
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 9.2 |
| 52w position | 0.0 |
Risk (lower is worse)
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 7.4 |
| volatility | 1.8 |
| put call | 10.0 |
| implied vol | 5.0 |
| max pain risk | 3.0 |
| beta | 10.0 |
- ▸Above max pain $3
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 5 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- ASYMMETRY:5.6>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.6<4.5
- DEATH_CROSS:HARD_BLOCK
- EARNINGS_PROXIMITY:5d<=7d
Warning (0)
none
Reward-to-Risk
5.58
Upside
+47.7%
Downside
8.5%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 31, MACD bearish
EdgeInst Constrain — Small cap ($1.4B) below institutional reach
SuitabilitySpeculative — Drawdown -62% (>40% off 52w high)
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 2.6<4.5 outcome against Value at 9.4 and asymmetric R:R of 5.58.
The strongest dimensions are Value at 9.4, Sentiment at 7.6, and Catalyst at 7.0; the weakest are Momentum at 2.6, Quality at 4.0, and Insider at 4.3. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 5.58 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deeply Discounted Valuation
Trip ifUpside to the analyst target falls below 15% from the current 47.7%.
- P2Earnings Beat Record
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P3Declining Revenue Weak Quality
Trip ifRevenue growth rises above 3% YoY for 2 consecutive quarters.
- P4Confirmed Downtrend Oversold
Trip ifPrice falls below the $3.59 stop level, more than 3% below the current $3.73.
- P5High Beta Volatility Risk
Trip ifImplied volatility falls below 50% from the current 86%.